Service charges on flats

[TheHeadOfTheHouse]

I’m looking into buying a flat, however the one I’m looking at has a £150 a month service charge. There is no lift in the apartment block.

i do think £150 seems alittle on the high side, other flats in the same area are around £80-£100.

does anyone know how often service charges go up?

What does the service charge include? Ours used to go up on an annual basis but it included heating which has obviously risen a lot and a porter's salary which you would expect to increase on an annual basis.

It includes cleaning of communal areas, communal gardening, window cleaning and the water bill.

The current water bill is only £20 a month were I am (house)

It will also include insurance? If yes, premiums have been going up
does it include sinking fund?

Be very careful would be my advice. I bought my flat five years ago when the service charge was around £1k per annum. It’s now not far off £2k! For that princely sum we get cleaners once a fortnight who spray a bit of air freshener around and half heartedly hoover, a grounds company who don’t know weeds from plants and a missing in action property manager who nobody can contact.

If you add my current service charge to my mortgage payments, it would be cheaper to have a house.

Oh I'd forgotten about insurance. Yeah, that always tends to go up in my experience.

I haven’t got that far yet regarding building insurance and sinking fund (what is this?)

im going to view it this week, but have never bought a flat before, only a house and the service charges do worry me alittle

does anyone know how often service charges go up?
The rules will be in the lease.
Who is in charge? - some random who owns the freehold or are the flats in a commonhold situation?

All flats are leasehold, 16 altogether.

from the land registry, it seems to be a limited company that own it

I’m guessing you’re not in London as £150 a month sounds low to me! But if others in the area are lower then it doesn’t sound like a good deal. A sinking fund is extra money put aside for repairs to the building and communal areas (not individual flats, you’re responsible for that). It tends to go up annually.

Does it include a contribution to the building maintenance fund? If that fund isn’t nice and healthy, could you potentially be hit with a large one time charge to cover a significant building repair?

places that keep their fees low to be attractive and avoid resident complaints are often not being careful about long-term stewardship.

It’s in greater Manchester.

Ask if you can see the accounts for the last few (ideally five) years. That should give you some idea of what it's spent on, how it's gone up and the state of the sinking fund.

places that keep their fees low to be attractive and avoid resident complaints are often not being careful about long-term stewardship.
Yup. It can be short-term-ism, which is great until a big bill lands and you are the one (as opposed to previous or next leaseholder) who is landed with the bill. It's like negative pass-the-parcel; you don't want to be the one holding the parcel liability when the music stops.

Mine is £200 a month, has gone up about £100 a year for the last 5 years. I'm in London, and this is a block with a lift and a parking garage with electric rollers. Those are the things that cost the most in terms of maintenance, then there's cleaners, gardener, window cleaner, buildings insurance, mgmt co fees etc - all of which are going up in price.

If you do proceed then you should obtain the last few years accounts during the conveyancing so you'll see what is being spent. It might be that they're keeping a very large reserve fund, which is a good thing, as may reduce the chance of you having any significant demands for one off works.

Many thanks for all pointers.

so if there’s no sinking fund, the residents would have to pay for major repair bills.

I thought this would be covered in the management fees, but will make sure I look into this.

regarding building insurance, will this mean I won’t need a separate policy if the management fees include it?

You will still need contents insurance

regarding building insurance, will this mean I won’t need a separate policy if the management fees include it?
Speak to a specialist. The walls and roof will be covered by the LL. I think that you probably wouldn't even be allowed to insure them too (insurers don't like paying out twice on the one incident!). But think about things like faulty plumbing causing water damage in the flat below - who is liable for that?

If you're not familiar with buying a flat, I would recommend doing some research regarding the length of leases and the value of ground rent charges as they can cause issues with mortgages.

The lease has 980 years left. Ground rent is £150 per year.

The service charge should include money going into a sinking fund, but yes if that doesn’t cover major repairs residents are billed for the shortfall. Billing tends to be done annually but usually management companies will let you pay in instalments. Buildings insurance is covered in my service charge so yes I think that’s standard that you won’t need a separate policy.